Question

An investment is losing value at a rate of 2% per year. Your original investment was $1250 three years ago. How much is it worth now to the nearest dollar?

Answer 1

It is worth `$1176` to the nearest dollar.

Explanation:

As the investment is loosing value at the rate of `2%` every year,

original value of an investment `I` after `n` years would be

`I(1-2/100)^n=Ixx(0.98)^n`

As original investment was `$1250` three years ago,

its present value is `1250xx0.98^3`

= `1250xx0.9412=$1176.49` or `$1176` to the nearest dollar.